Chili's Restaurant Operator Brinker's Stock Slumps After Morgan Stanley Downgrade

By Tomi Kilgore Markets MarketWatch Pulse

Shares of Brinker International Inc. slumped 1.1% in morning trade Tuesday, after the operator of Chili's Grill & Bar and Maggiano's Little Italy restaurant chains was downgraded at Morgan Stanley, which cited concerns over decelerating industry trends. Analyst John Glass cut his rating to underweight from equal weight and lowered his price target to $47, which is just 0.8% above current levels, from $51. "While market expectations for sales have been reduced and shares have already faded from their postelection highs...we see risk to the consensus estimates in [fiscal 2017] as broader industry trends continue to weaken...and [Brinker's] core Chili's business has seen its sales trail the industry average over the last seven quarters (though the gap narrowed in the most recent quarter)," Glass wrote in a note to clients. Brinker's stock has run up as much as 12% after the election to a 15-month high on Nov. 23, but has since tumbled 15%. He also downgraded Blooming Brands Inc. , which operates Outback Steakhouse and Carrabba's Italian Grill, to underweight from equal weight. Meanwhile, Glass upgraded Texas Roadhouse Inc. to equal weight from underweight. Brinker's stock has lost 1.5% over the past 12 months, while Bloomin' shares have gained 2.6%, Texas Roadhouse's stock has soared 31% and the S&P 500 has climbed 21%.

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